Budget Battle Brewing Again On Capitol Hill

President Obama's chief of staff rejects the idea of austerity as a priority, saying it could slow slow the economy's progress.

"I think there is pretty broad agreement that the time for austerity is not today," Jacob Lew said during a series of appearances on Sunday talk shows. "Right now we have an economy that's taking root ... austerity measures right now would take the economy in the wrong way."

It was a preemptive attack on measures Republicans are geared to take as Obama rolls out his 2013 budget proposal. The president unveiled the budget Monday morning.

The new budget that Obama is sending to Congress aims to achieve $4 trillion in deficit reduction over the next decade by restraining government spending and raising taxes on the wealthy. To help a weak economy, Obama's proposal Monday requests increases in transportation, education and other areas.

The administration calls the plan balanced, while the GOP said its a stark reminder that Obama didn't go far enough in reigning in government spending. The debate could play a defining role in the 2012 election.

Obama's spending blueprint for the budget year that begins Oct. 1 projects a deficit for this year of $1.33 trillion. That would mean four straight years of trillion-dollar-plus deficits.

The budget will project a decline in the deficit to $901 billion in 2013 and continued improvements shrinking the deficit to $575 billion in 2018.

Republicans pointed out Sunday that Obama proclaimed he'd cut the deficit by half by the end of his first term, and accused him of breaking his promise to the American people.

Lew countered that the president inherited an economy in disarray; Obama was forced to take measures to prevent the recession from becoming a full-blown depression, as well as address the needs of an increasingly unemployed population. Unemployment drove deficits higher than anyone anticipated, Lew said.

House Republicans are preparing their version of Obama's budget that will propose sharper reductions in government entitlement programs such as Medicare while avoiding any tax increases.

"We're taking responsibility for the drivers of our debt," said the chairman of the House Budget Committee, Rep. Paul Ryan, R-Wis. "So when the dust settles and people see actually what we're doing, how we're promoting bipartisan solutions."

According to a White House fact sheet, Obama's budget will adhere closely to the approach he outlined in September in a submission to the congressional "supercommittee" that failed to agree on at least $1.2 trillion in additional spending cuts to keep across-the-board cuts from taking effect next January.

The Obama budget sticks to the caps on annual appropriations approved in August that will save $1 trillion over the next decade. It also puts forward $1.5 trillion in new taxes, primarily by allowing the Bush-era tax cuts expire at the end of this year for families making $250,000 or more per year.

Obama, as he has in the past, also proposed eliminating tax deductions the wealthy receive and would also put in place a rule named for billionaire Warren Buffett that would seek to make sure that households making more than $1 million annually pay at least 30 percent of their income in taxes.

Obama would also impose a new $61 billion tax over 10 years on big banks aimed at recovering the costs of the financial bailout and providing money to help homeowners facing foreclosure on their homes. It would raise $41 billion over 10 years by eliminating tax breaks for oil, gas and coal companies and claims significant savings from ending the wars in Iraq and Afghanistan.

Lew said the budget would cut spending by $2.50 for every $1 in extra taxes it seeks.

"In the long run, we need to get the deficit under control in a way that builds the economy," Lew said. "We do it in a way that's consistent with American values so that everyone pays a fair share."

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